Author: AFP / Source: Times of Malta
Germany will find out on Tuesday if Europe’s top economy ended 2018 in a technical recession, with fears over slowing momentum fuelling calls for Berlin to use its fiscal leeway to bolster growth.
Federal statistics office Destatis will publish a preliminary estimate of Germany’s fourth quarter and full-year gross domestic product figures for 2018, data closely watched across the eurozone for signs of a wider slump.
The German economy shrank by 0.2% in the third quarter, its first contraction in more than three years.
The setback was mainly blamed on carmakers’ struggles to get ready for tough new EU emissions tests, which caused production bottlenecks across the vital sector, and low water levels in the Rhine that hampered shipments of chemicals and raw materials.
Disappointing industrial data since then has suggested the aftershocks of both stretched into the final months of 2018, raising the prospect that Germany’s output shrank for a second consecutive quarter — the definition of a technical recession.
Uncertainty about Brexit and weaker Chinese growth as a result of US-led trade tensions have further rattled nerves in export-reliant Germany.
But many economists have been quick to stress that Germany’s underlying fundamentals remain strong, powered by healthy domestic demand.
“Even if it happens a technical recession should not leave any marks on the labour market but should be the very final wake-up call to step up investments and structural reforms,” said ING Diba bank analyst Carsten Brzeski.
Economy Minister Peter Altmaier, who expects German growth of around 1.5 percent for 2018 compared with 2017’s 2.
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